I'm the environment editor at Forbes. Before joining Forbes in April 2011, I wrote about all things green and tech as a contributor to The New York Times, a senior editor at Fortune and an assistant managing editor at Business 2.0 magazine. I previously was the business editor at the San Jose Mercury News and during the (first) dot-com era served as a senior writer and senior editor at The Industry Standard (RIP).

“I think Tesla is going to take you to task, so you’ve got to come up with something – if you’re going to stay in automotive, you’ve got to make that car fly,” said Draper, an investor in high-flying electric carmaker Tesla Motors.

It was an off-hand remark in a talk about entrepreneurship but he doubled down when he subsequently told reporters that Detroit should wave the white flag when it comes to building electric cars.

“Create a flying car,” he said to the Detroit Free Press. “Create something different because you’ve lost the electric-car battle. See if you can win another.”

Tesla, of course, has almost single-handedly made electric cars sexy, manufacturing stylish, made-in-Silicon Valley high-tech vehicles that eliminate range anxiety – as long as you can afford the high five-figure sticker price.

The initial battery-powered offerings from the big automakers, meanwhile, are stuck in neutral, with sales of Chevy Volts, Nissan Leafs and Ford Focus Electrics below expectations, apparently due to the vehicles’ high prices, limited range and the paucity of public charging stations.

But the electric car battle has only just begun and if the objective is to win the war again fossil fuels then Tesla needs Detroit, Tokyo and Munich to join forces and sell as many cars as possible.

For all the media hype surrounding Tesla, the company in the near future will not sell anywhere near the number of cars needed to create the economies of scale that will lower the price of lithium-ion batteries, the most expensive component of an electric car.

“I think Tim was making a provocative statement,” Paul Mascarenas, Ford Motor’s chief technology officer, told me Monday night at a dinner in San Francisco with some of the automaker’s top tech executives.

“We’re talking about electrification of tens and hundreds of thousands of vehicles,” added Mascarenas, who was in the audience in Detroit when Draper spoke. “Volumes that will really make a difference on a global basis. We’re talking about affordability and bringing electrification down to vehicles that cost less than $30,000.”

(Ford on Tuesday is launching the 2013 Fusion sedan in San Francisco, New York and other cities, showing off a variety of drive trains, from hybrid, to plug-in hybrid to a gasoline engine that boosts fuel economy by shutting down when the car is not in motion.)

Price aside, the success of electric cars will depend on developments outside the auto industry’s direct control, such as the building of a charging infrastructure that will alleviate drivers’ worries about running out of juice.

Tesla is getting around that hurdle by building long-range, albeit pricey, cars and is set to unveil a fast charger to allow drivers to add 150 mile of range within 30 minutes. Tesla chief executive Elon Musk has also said that the company will introduce a smaller electric sedan in the $30,000 range sometime in the next few years.

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The electric cars being released are very innovative, and are without a doubt a good move by some companies. They may not make much profit now, but I believe it will give them the upper hand when the cars really start moving out and get much cheaper to develop.

However, some companies should not be taking this route at the moment. Chevy is a perfect example. The company can barely carry its own weight, yet decides to put over a billion dollars in producing this Volt of theirs. It’s barely marked 1/3 of it’s initial sales estimates, and I’m willing to bet that the 2-3 I’ve seen on the road are leases.

Tesla is definitely taking the right approach to the electric car. They are making an extremely well rounded electric car with performance, sleek styling, fantastic interior, and giving an overall “wow” aspect to the vehicle. Yeah, it costs quite a bit, but they did it right. There’s a reason that Volt sales and other EV are below expectations. They are too expensive right now, and too unpredictable.

You do know that GM designed the Volt during the Bush administration and well before the start of the recession, don’t you? And that members of the Obama administration suggested to GM that they drop the Volt?

(I hope you realize that it often costs car companies over a billion dollars to market a new gas model?)

You don’t have to hate on the Volt because it’s “Obama’s car”. It’s an American designed innovation built by American workers.

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Now, the Tesla S is a very nice car, very nice indeed. The lowest range (160 mile) version lists at $57,400. The 2013 Volt sells for $38,965, let’s you drive an EPA-estimated 38 miles before switching to gas.

That’s a difference of $18,435 for which one gives up some pizzazz, but perhaps gains utility. You can drive 380 miles before stopping when you need to.

Tesla has targeted sales of 5,000 Model S sedans in 2012 with volumes expected to double in 2013.

First half of 2012 GM sold 10,666 Volts in the U.S and 2,861 Ampera in Europe for a total of 13,527 in six months, well over twice what Tesla expects to sell in its first year.

In addition Volt and Leaf combined have far outsold in their first market year the Toyota and Honda hybrids in their first market year.

Just think about what sales might have been like had we not still been recession recovery mode.

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Forbes. A magazine about business and investing. How can you make wise investments if you put a political filter in front of the facts?

Tesla is taking the right approach— to another Obozo bailout. They’re selling the Model S for half of the marginal cost to produce it, but they’ll make it up on volume at less than 10,000 vehicles/year. The interior looks like something from an 80′s pick-up. Huge dilution soon, but buy more!

Perhaps Todd could do some reporting for us. I’d love to know how Testla managed to bring a new car to market for apparently small change.

What I’ve heard is that a new car model (fuel or EV) can easily cost over a billion dollars for a large car company to bring to market. Apparently the Edsel cost over $2 billion in current dollars. (Ford never recovered that money.)

How did Tesla do it? Breaking even with ~10,000 – 15,000 units. Can’t be that much profit in an individual S?

First, at $27,700 ($35,200 – $7,500 subsidy) the 100 mile EV Leaf is below the average US new car sales price of about $31,000. The Leaf is not a stripped down econobox, fair analysis would require like to like comparisons.

Second, large manufacturing will likely bring economy of scale. Will Tesla get pushed aside by larger manufacturers or will is shove it’s way into the group of big boys? Time has to answer that one. Given that Musk just sent the first successful rocket into space, to the space lab back, best not to sell him short. Not every brand on the market today started early last century.

Now back to EVs…

I suspect breaking the psychological price barrier of $30k and delivering about 175 mile range is the sweet spot the industry should be aiming for.

Right now if you bought a 2012 Leaf for full price (no subsidies), charged it on 8 cent off-peak electricity and drove it 12,000 miles a year it would cost the same over ten years as buying a $25k, 40MPG gasmobile and driving it on $4/gallon gas. The general public has not yet comprehended that simple fact. EVs have already reached purchase/operation cost parity with ICEVs.

Bring prices down to less than a $5k premium and I think many potential buyers will ‘get it’. Especially with a couple more years of reading about EVs.

Give drivers a 175 mile range, < 20min, 95% recharge ability and one could drive all day, 500 miles, with 2 modest length stop. People driving fuel vehicles stop once for a refill and once to eat/pee, minimum.

If one could purchase an EV that saved them the purchase price premium in no more than three years and which they could drive long distances then I think the market flips. (We'll have PHEVs for those who drive away from where rapid charge points will be found during the next several years.)

They have developed a lithium-ion battery that holds over three times the energy storage of current EV batteries. 400 watt-hours per kilogram vs. 120 watt-hours per kilogram. This goal is already met and indepently confirmed by the US Navy Naval Surface Warfare Center, Crane Division

Envia projects the cost at less than half the half cost of other EV batteries. $150 per kilowatt vs. $400 per kilowatt (apparent current cost). They can do this because they are boosting capacity over 3x. Materials, labor and energy input stay roughly constant. They’ve done clever things with the cathode and anode.

Their batteries under test in the lab have exceeded more than 450 cycles with <25% capacity loss. 450 cycles in a 200 mile range EV would be a 90,000 mile battery. I think most people would accept a 90k battery if they thought that they could replace with a much cheaper, better battery in about 8 years when range starts to cramp.

A 24kW (Leaf-sized) battery pack at $150/kW would be a $3,600 expense.

Envia anticipates getting 1,000 cycles expected with development. This would make their battery a world changer. 175,000 mile battery.

The are not going to manufacture but license to other manufacturers. Envia has signed agreements with GM. Envia is financed by the Energy Department and G.M. Ventures, the venture-capital arm of General Motors, as well as other investors.

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I believe that this in only one of a few new technologies under development. Perhaps all won't make it, but it's likely at least one will.

While everyone concentrates on the battery and range what we really need to concentrate on is the environmental impact. The Volt gets about 10 mpg equivalent GHG when the power plant burns coal. Even with natural gas that is still around 20 mpg and anything but environmentally friendly when compared to the new hybrid products that get 47 mpg.

Finally there is the cost calculations which are unfair as they ignore road taxes that will have to be levied at some point. Further, they assume cheap electricity prices when 13 cents per kWh is normal in most parts of the country.

The most efficient fuel economy and environmental solution is hybrid technology married to a bio-fuel based E85 optimized engine. That is a viable solution now.

You’d have a good point if the electricity did come from coal. But it doesn’t, it comes from a mix of inputs.

Years back coal produced over 50% of our electricity, in 2004 it fell below 50%. Last year coal was down to 42.4%. First half of 2012 (unofficial numbers) coal provided less than 35% of our electricity. Next year coal will be down some more because we’ve got a bunch of coal plants scheduled to close in 2013. (Coal turns out to be our most expensive source of electricity.)

For a while natural gas will do a lot of the coal replacement. As long as NG stays cheap. Right now the median LCOE (levelized cost of electricity – cost of actual production – no subsidies) of NG and wind are the same. Five cents per kWh. The price of wind has been dropping and is expected to drop down to 3 cents over the next few years. The EIA is projecting an increase in NG prices next year. (The current price of NG does not support drilling new wells. We’re burning through a temporary surplus.)

Market forces are going to build more wind and cause less NG to be burned.

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Yes, at some point EVs and PHEVs will need to start paying road tax. But you put a thumb on the scale when you use the 24 hour average price of electricity. EVs will generally charge with the cheapest electricity, off-peak electricity. My guesstimate is about 8 cents per kWh.

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BTW, having a lot of EVs on the grid will make wind farms more profitable. They will create an off-peak market. As you probably know, suppliers don’t make much money off-peak when supply is up and demand down. EVs will create a late night market. More profit for wind, late night, will increase investment and that will bring more turbines on line.

More wind on line during the day means cheaper electricity for us all.

Good of you to mention Better Place. The business model, of course, is heavy on investment in infrastructure and the margin stems from the price difference between an electrically driven mile and a petrol powered mile. Electric vehicles being so much more efficient, there is money to be made there. However today it only has a chance of working at $8 per gallon countries like Israel or most of the EU, not the US.

But saying that, it really does work. Over 100 days and nearly 4000 miles for me and the system and service Better Place are providing in Israel are both astonishingly good. I love driving EV and there is now almost no trip in Israel I can’t make. The range of a single battery is mostly meaningless to me.